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May 31, 2012 -- The Federal Trade Commission (FTC) has issued a letter to the North Carolina General Assembly stating its opposition to pending legislation that would give the state dental board more control over contracts between dentists and out-of-state dental management chains.

HB 698 and SB 655, known as the Dental Management Bill, would give the North Carolina State Board of Dental Examiners more authority to investigate and enforce regulations regarding dental chains. North Carolina has 4,600 dentists, and more than 50 dental practices in the state use management companies, according to the dental board and the North Carolina Dental Society (NCDS).

But opponents contend the state's rules are already the most restrictive in the U.S.

Supporters and opponents of the proposed legislation have poured hundreds of thousands of dollars into media campaigns and political contributions to sway lawmakers. The Alliance for Access to Dental Care, which opposes the bill, has raised more than $1 million, made $86,000 in campaign contributions last year, and has spent $370,000 on a media campaign, according to disclosure reports. Meanwhile, the NCDS gave about $57,000 to lawmakers in 2011 and hired political consultants for TV ads and mailings supporting the bill.

Now the FTC is recommending that lawmakers reject both HB 698 and SB 655. In a letter dated May 25 and addressed to Rep. Stephen LaRoque (R-Lenoir) -- who opposes the legislation and had requested that the FTC review it -- the commission states:

You have explained that, within the state's existing statutory framework for the licensing of dental professionals and the provision of dental services, Dental Service Organizations ("DSOs") have successfully operated in North Carolina "for over thirty years and assist dentists and dental practices with a variety of the non-clinical aspects of operating a successful practice, including accounting, bookkeeping, scheduling services, procurement, and the like." You have noted that the additional restrictions proposed in H.B. 698 "would significantly undermine the DSO model," and you have asked FTC staff to analyze "the potential competitive implications of the proposed legislation."

We are concerned that the Bill may deny consumers of dental services the benefits of competition spurred by the efficiencies that DSOs can offer, including the potential for lower prices, improved access to care, and greater choice. Underserved communities, such as the 78 of 100 counties in North Carolina that are listed as Dental Health Professional Shortage Areas, may be particularly affected if DSO efficiencies cannot be realized. Therefore, we urge you to consider whether the Bill's restrictions and grants of regulatory power to the North Carolina Board of Dental Examiners ("Board") are necessary to protect consumers. If not, the North Carolina legislature should reject the Bill.

The board's recent action against an established dentist when he entered a management contract with a DSO, and the board's consent agreement preventing that DSO from entering North Carolina for five years, provide strong evidence of the board's hostility toward dentists' use of DSOs to help manage the nonclinical aspects of their practices, the FTC letter noted.

"For these reasons, and in the absence of DSO-specific safety concerns, we urge the North Carolina legislature to consider the potential anticompetitive effects of H.B. 698 -- including higher prices, reduced access, and decreased choices for consumers -- and to reject H.B. 698 (as well as S.B. 655, the companion bill in the North Carolina Senate)," the letter concluded.

This is the second opinion letter the FTC has issued in response to anticompetitive actions taken by the state dental board. In 2010, the FTC initiated an action against the board alleging that its restriction against nondentists for providing teeth-whitening services was overreaching and made it harder to obtain these services and more expensive for North Carolinians.

In a unanimous opinion and final order issued December 2, 2011, the FTC held that the board sought to, and did, exclude nondentist providers from the market for teeth-whitening services, in violation of Section 5 of the Federal Trade Commission Act. The board is now appealing that decision.

"The issues are on different tracks, but there is a common thread," Noel Allen, an attorney representing the dental board in the teeth-whitening case, told DrBicuspid.com. "Bearing in mind that the FTC regards public protection as an inadequate basis for any statutory restriction on the delivery of health care, the FTC support for further commercialization of medical professions is not surprising. It should be noted that in their letter they are telling state lawmakers that “the Board already oversees health and safety issues…” but in its administrative decision against the board [regarding teeth whitening], the FTC said that public protection was basically irrelevant: '…whether teeth whitening services performed by non-dentists is safe and other testimony on harm purported to have been caused by non-dentist teeth whitening need not and will not be addressed.'"